Nissan Motor Co, travel agents and other companies are lowering expectations for business in China after the government admitted that the spread of severe acute respiratory syndrome is worse than earlier reported.
Nissan Motor Vice President Katsumi Nakamura said his company's production plans for manufacture of new Sunny brand passenger cars in southern China may be delayed. SARS "is raising concern among engineers and executives who have to go to southern China" to oversee the project, he said at the Shanghai Auto Show.
After President Hu Jintao ordered full disclosure on the disease and the Communist Party dismissed the health minister and Beijing mayor for covering up the extent of the disease, provinces across the country are spilling forth with reports of new infections. Thirteen new cases and two new deaths were reported today, and the number of provinces with SARS rose to 15 from 11.
The government canceled the weeklong Labor Day holiday due to start May 1 to try to contain the disease. The nation's new health minister said losses to the tourism industry will be "massive."
Fully reporting SARS cases "is a matter of credibility," said Jiang Fan, head of fixed-income research at Goldman Sachs Group Inc. in Hong Kong. "If information released by the government doesn't carry credibility, there are serious consequences for the financial market."
China has reported 1,820 people infected and 81 dead from the disease. The government said it expects the epidemic to worsen, with about 400 suspected cases in Beijing likely to become confirmed infections. The Health Ministry yesterday raised confirmed cases in the capital eightfold to 339.
The disclosures will be seen as bad for business, bad for markets and bad for the economy. The Shanghai Composite Index was down as much as 1.6 percent.
Eastman Kodak, the world's biggest photography company, said is expects a drop in film and camera sales in China, the Hong Kong's Standard newspaper reported, citing regional President Henri Petit.
The nation's US$66 billion tourism industry, which contributes to about 4 percent of China's gross domestic product, is a frontline casualty of the SARS epidemic. Last year an estimated 70 million people traveled during the long Labor Day holiday, spending 28 billion (US$3.4 billion).
Travel agents are feeling the effects. Purun Air Service Co says 90 percent of its customers have cancelled their bookings, mostly for overseas destinations.
"Chinese people are just not being welcomed overseas, and that's really hurt our business," said Vice General Manager Vanessa Han.
Foreign travelers, who account for about two-fifths of China's tourism industry, are shunning the Great Wall, Terracotta Warriors and Tibet's Potala after the US and other countries advised their nationals against trips to China. Bookings from foreign tourists are down by more than half the past month, according to CYTS Tours Corp, China No. 2 travel agency.
China began stretching the May Day holiday to a weeklong break three years ago to encourage consumer spending in an economy that needs to grow at least 7 percent a year to provide jobs for new urban dwellers entering the workforce. Last week the government said the economy grew 9.9 percent in the first quarter.
Still, some industries may benefit from the disease. Ping An Insurance Group Inc, the country's No. 2 insurer, said life insurance premium income rose 10 percent in March from February, partly because of consumer concern about SARS, spokesman Sheng Ruisheng said.
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